Every business has tools to manage revenue and operations, such as cash registers, computers, kiosks, security equipment, software, etc. These are nonnegotiable. But there are elective items that affect profitability, too. In the car-wash business, they include revenue- generators like vacuums, vending machines, signage, detailing services, windshield repair and concessions. There are also environmental systems to consider such as water treatment, reclamation, energy-efficient lighting, insulated doors and heating. They arent significant to the wash process, but theyre important nonetheless.

When you embark on the startup of a car-wash business, its easy to become so overwhelmed with the intensity of the project that you overlook the minor players. Lets take a look at how and when these ancillary items come into play.

The Planning Stage

Assuming you are building a ground-up project, your first encounter with the issue of ancillaries comes with your initial visit to the city engineer and planning offices. Officials will bombard you with questions, many of which will require an answer before you can obtain approval. Every department plays a role and has an agenda. In the end, some of the things you thought were optional add-ons will be mandatory.

Most local governments are knowledgeable about commercial car washes and the overall impact they have on a community, and theyll usually expect some sort of quid pro quo. One way a municipality deals with the stress and strain of its budgets is to impose an impact fee, also called a development fee, which is levied on a project developer as compensation for the otherwise unmitigated effects the project will create (i.e., environmental). The fee can be daunting. Ive recently heard of fees in excess of $250,000 to connect into a citys water and sanitation system.

After you recover from the initial shock, you think, There must be a way to minimize this! Fortunately, there are a number of companies that specialize in water-recycling or reclamation systems. Depending on their complexity and size, commercial systems fall in the range of $25,000 to $60,000. The investment should cut your impact fee by two-thirds, lower your water and sewer costs, allow you to operate in times of drought, and position your business as a green neighbor within the community.

Even if youre purchasing an existing car-wash site, you could face a situation in which water and sewer bills are through the roof or drought conditions prevail. The addition of a water-recycling system could be worthwhile, depending on the site. The benchmark is: If the investment will pay for itself within three to five years, its sensible.

There are several good water-treatment systems out there. You can find more information online or through your car-wash supplier. A couple of good websites to visit are www.carcarecentral.com and www.autocareforum.com.

A water-treatment system produced by AquaChem Inc.

Operation Time

Once youre up and running, youll find there are a number of revenue-generators that are not part of the wash process but are integral to the success of your business. Ancillary items will vary, depending on the type of car wash you build.

You can almost always add coin- or credit-activated vacuum cleaners. These simple devices are the unsung heroes of car-wash sites. They always report to work, they pay for themselves in less than a year, and theyre available to customers 24/7.

An Ultra 6-in-1 station by J.E. Adams Industries Ltd.

Other popular ancillaries include vending machines, signage and retail merchandise. These items capitalize on your commercial space to create profit. If your car wash is attended, there are numerous other amenities that will drive business and enhance your customers experience, such as food or coffee carts, body and windshield repair, express detailing, gasoline, quick lube, and countless others. The bottom line is ancillary services are great as long as they add income without complicating or compromising margins.

Vending and change machines make for customer convenience.

Frogs Express Wash offers a complete array of ancillary products and services.

Some Added Twists

Some new twists have been added to the carwash offering. One attracting a lot of attention these days is the express-exterior concept in which the customer drives into the property and uses an automatic tellerusing cash or credit before proceeding to an exterior wash. Generally, these are tunnel washes with a conveyor. The customer is pulled through a series of wash, rinse and drying arches. Once that is completed, he can proceed to a free vacuum area or exit the site.

Express-exterior washes have really benefited from technology. Without the availability of computer cash-management and control systems, they wouldnt have become as attractive an offering. The addition of new vacuum equipment, secure vending, remote diagnostics, security, and off-site management has also helped launch them to the status of site necessity.

Exterior-express tunnels are the latest twist to the car-wash offering.

I have singled out the express-exterior wash, but the fact is every car wash can benefit from these ancillary developments. Consider in-bay or rollover car washes. There are so many of these facilities in most markets that they need ancillaries to create a competitive edge. For example, one of the things motorists most often wish for is a better way to clean their wheels and rid their bumpers of bugs. Voila! Now there are products that meet these needs, HubScrub and BugBuster. Do they meet our criteria for adding value while improving the bottom line? Yep. So, are they a necessity? You bet!

HubScrub rids wheels of dirt and grime.

For a Better Tomorrow

Every business operator must ask himself, What can I do better tomorrow than I am doing today? The ancillary avenue will always offer up ways to improve. But when choosing products and services to add to your site, be deliberate. Each item should meet these general criteria:

1. Can the ancillary be depreciated and capitalized?
2. Does it add value for customers?
3. Does it enable you to manage your business more effectively?
4. Will it pay for itself in less than five years?
5. Will you gain a competitive advantage by incorporating it into your project?
6. Will it help ensure future business?

There is a plethora of items you could add to the list of offerings. In fact, there is still much to learn and explore in the ancillary field. The trick is to dedicate some time to research, choose the right suppliers, ask for help when you need it, and dont leave ancillaries for last. If a product or service adds value to your business, you definitely need it.

Fred Grauer is the president of Grauer Associates and the vice president of investor services for Mark VII Equipment LLC. He can be reached at [email protected].

Many self-storage owners are misinformed when it comes to the subject of replacement cost. This vital part of your insurance policy protects you in the event of catastrophe. Knowing the benefits and options makes for smart business.

Simply put, replacement-cost coverage ensures you can replace damaged property with comparable items. Actual-cash-value insurance, on the other hand, covers the replacement cost minus depreciation since the date of purchase. If premiums are reasonable and affordable, replacement-cost coverage is the wiser choice.

Unlike personal property that depreciates with time, business property appreciates. As a self-storage owner, you can expect a slight increase in your premium, generally 4 percent to 8 percent per year, which reflects the increased value of your facility. Your carrier is not trying to over insure you. The companys aim is to give you coverage that would allow you to comparably rebuild in the event of a loss.

Whats Covered?

Business-property coverage can include anything considered to be part of facility construction, from the foundation to the roof. Depending on your policy, covered structures can comprise fences, retaining walls, roadways, patios or other paved surfaces, underground pipes, flues or drains. Business-personal property includes anything used for daily operation, such as computers, maintenance equipment and office furniture. Items generally not covered are the land on which the facility sits, motor vehicles, and tenants stored goods.

Insurance policies and coverages vary from carrier to carrier, so ask how your insurer can best meet your needs. The supplier will base your premium on information you provide, using an estimator that draws on building-cost data and methodology to determine replacement costs and depreciation values. Other factors that might affect your premium are:

• Distance to the nearest fire station and hydrant
• Construction quality of the facility
• Sprinkler systems
• Site security
• Geographic location

Large buildings renovated or converted for self-storage usually carry a higher premium. This is because in the event of a calamitous incident, the probable loss on a single big building vs. several smaller buildings is 100 percent.

Fair Value

What is the best way to get a fair, correct number when determining 100 percent replacement value for your facility? An appraiser can best conclude actual property value on your behalf, or your insurance company can create an appraisal using commercial estimators such as Marshall & Swift or E.H. Boeckh. You should not attempt to appraise the buildings yourself, as the necessary knowledge is beyond the scope of the average facility owner.

While insurance companies encourage owners to insure their properties for full value, some policies may contain a coinsurance clause, a provision that only requires the policyholder to maintain coverage equal to at least 80 percent of the propertys actual replacement cost. Because partial losses are more common than total losses, some insureds take the gamble. Coinsurance can provide a reduction in premium, but penalties can apply, and a settlement will be merely a percentage of full contract reimbursement.

A qualified company that specializes in self-storage insurance is your best bet for obtaining the replacement coverage to satisfy your facilitys needs. It takes an agent familiar with the industry to truly help you protect your business.

John Roark is part of Universal Insurance Facilities Ltd., which offers a comprehensive package of coverages specifically designed to meet the needs of the self-storage industry. For more information, a free copy of your states lien laws, or a quick, no-obligation quote, call 800.844.2101; e-mail [email protected]; visit www.universalinsuranceltd.com.

Since then, all aspects of the industry have evolved. The profitability of the trade has created an unprecedented swell in competing storage complexesand a heightened industry standard. Facility quality, design and location are all immensely improved. While self-storage may once have been an easy way to make money, todays market is complicated and competitive.

Tremendous opportunity still exists for those willing to complete the proper due diligence: Examine 20 or more potential locations; find the one worthy site; struggle with difficult agencies and neighbors; and, finally, provide the most convenient, visible, attractive facility in the target market. In this regard, the mixed-use development (or planned development) has become a common, often essential vehicle used by self-storage developers to get ahead.

In the MUD

The technical definition of a mixed-use development (MUD) may vary from one jurisdiction to the next. For the purposes of this article, it is defined as a specified property tract that is master planned by the developer and approved by the local planning and zoning authorityto allow specific land uses.

For example, a 100-acre MUD on a major arterial street might allot the rear 70 acres for single-family development, another 15 acres for multifamily, and the prime 15 acres of frontage for retail. The tracts that comprise the MUD may be given a generic zoning classification, such as C-1 Retail, to designate allowed uses; or the developer and planning/ zoning board may approve a list of specific uses, such as restaurant, convenience store or self-storage.

A MUD lets planning and zoning staff closely monitor and control the type and quality of each development while allowing builders to secure approval for otherwise restricted uses. For example, in seeking endorsement, a developer may consent to deny taverns and automotive sales but permit self-storage or a car wash. This give and take eliminates controversial uses, satisfying the city's requirements, but opens the doors for businesses that normally fall outside generic zoning classifications. The savvy storage developer should be aware of this opportunity, particularly in major urban markets.

A Slice of MUD Pie

Although smaller developers may only be interested in self-storage and not up to the task of a MUD, they can still benefit. One strategy is to monitor newspapers and business journals for MUD developers and contact them about carving out a location for a storage site. By getting involved in the project early on, the small developer has a chance to negotiate the purchase of leftover parcels that are perfect for storage and the MUD developer can sell at an affordable price.

In restrictive urban areas, this newly created self-storage site may be the only entitled one in the immediate market. This tactic reduces lease-up risk and creates an outstanding long-term location that will be valued at a premium. As self-storage advances to a widespread product type, the advantage of a captured market cannot be understated. Researching and collaborating with MUD developers may be more tedious than finding an average property already zoned for storage. But the higher property value and profit potential as well as the reduced risk are worth the effort.

The MUD Makes Money, Honey

For the developer with extensive capabilities and financing, a MUD can create some exciting financial potential. Consider this hypothetical opportunity: A developer finds a 10-acre corner parcel on a major arterial for $2.18 million ($5 per square foot). The land is not currently zoned for self-storage; its zoned half for Office and half for Retail. The site has secondary frontage on a road leading to residential developments and adjacent property consisting of office condos. The current owner will not subdivide or will only do it for a premium.

To capitalize on the prospect at hand, the developer can rezone the property as a MUD to achieve several win-win outcomes. Lets suppose he is primarily interested in self-storage. The most cost-effective location is a flag-shaped site farthest from the hard corner with a modest amount of frontage (perhaps 150 feet). To garner the support of neighbors and zoning staff, the developer should meet with each party individually, presenting the positive attributes of the storage development:

• An attractive leasing office and building facades near the frontage area
• Fortress-style development insulating the office-condo project and single-family neighbors
• All doors facing the interior of the project
• Low, wall-mounted lighting
• Landscape buffers
• Low traffic impact

The remaining portion of the MUD would include C-1 Retail useswith any required exclusions based on negotiations. Of course, the office-condo neighbor will be thrilled there wont be a competitor next door!

The parcels might include, for example, a 1-acre hard corner bank site, a 1.5-acre restaurant pad and a 3.5-acre shopping center, with the conceded benefits to the neighbors/zoning board of increased landscape buffers, cross access and parking mandates for the entire lot. There may be minor increased requisites for aesthetics, landscaping, etc. However, the developer can now build his self-storage project in a first-class location and sell (or develop) the remaining parcels.

Lets take a look at how the economics might look if he decides to sell. Assume the following sale prices:

• $522,720 for the 1-acre bank site ($12 per square foot)
• $653,400 for the 1.5-acre restaurant pad ($10 per square foot)
• $914,760 for the 3.5-acre retail strip parcel ($6 per square foot)

Subtract those amounts from the $2.18 million cost of the original 10-acre parcel, and youre left with an $87,120 price tag for the self-storage project. Thats not bad when you consider the fair market value of an entitled self-storage site of that size is $800,000 to $1 million.

Although the exact numbers will vary, this opportunity is available in most major markets across the country. In fact, its often easier to find an attractively priced 10- to 15-acre MUD in a prime location than it is to find a suitable 4-acre site properly zoned for self-storage. Now thats how you have fun playing in the MUD!

Jeff Eckols is a veteran real estate attorney and president of San Antonio-based Maverick Investments, which handles land and property acquisition, sales and development. He has been involved in the development of 16 Noah's Ark Self Storage locations and facilitated the sale of 10 storage complexes in the last three years. For more information, call 210.477.1707.

Mike Parham is the founder and president of San Antonio-based Noahs Ark Development, which executes market analysis, preliminary site review, site development and land contracting. Parham launched his career in self-storage more than 20 years ago as the owners of NDS Construction, where he serves as CEO. NDS is a full-service design/build construction company responsible for the completion of more 300 self-storage projects. For information, call 210.477.1220; visit www.noahsarkselfstorage.com. 

The Payment Advisor is a monthly Q&A column to which readers can submit questions about card transaction systems, electronic funds transfer, check acceptance and processing, wireless transactions, international funds transfer, and other payment issues. To participate, e-mail questions to [email protected]. Also watch for quarterly articles on related topics.

I am asked one payment question over and over again by inquirers to this column, so this month I will answer it in depth. The question is: How do I know if I am getting a good rate with my payment processor? The answer is multifaceted. In todays financial environment, you must concern yourself with issues of security, compliance and risk as well as rate.

To determine if you will have an equitable relationship with your provider, get the following critical information in writing:

1. A detailed copy of the providers resume

2. References for the provider from people in your industry

3. A complete copy of the service contract

4. A complete list of definitions (terms vary among processors)

5. A clear indication of the length of the contract and all termination conditions and fees

6. A specific list of all rates

7. A specific list of all fees

8. A specific list of all equipment costs

9. An outline of who provides customer service

10. Copies of all documents related to payment-association compliance

Before choosing a payment processor, obtain at least three written bids to compare these important items. This will help you set a benchmark against which to measure.

Ross Federgreen is a co-founder of CSRSI, which provides an integrated approach to the analysis, design, implementation, deployment and management of electronic transaction services and systems. Since 1999, the company has helped more than 350 public and private institutions reduce the cost of acquiring money and minimize the liability exposure related to payment transactions and customer data. For more information, call 866.462.7774, ext. 1; e-mail [email protected]; visit www.csrsi.com.

Many of you think youre in the RV and boat-storage business. In fact, youre in the sales business. What you sell is space, support and service.

Some businesses are lucky or smart enough to establish themselves in a great location where customers will come to them. And some owners and managers are just naturally good at dealing with people. Those of you who fall into these categories have been successful regardless of your sales approach. You also have the most to gain from teaching sales skills to your staff because youre in an excellent starting position. Those who dont have a prime locale or innate people skills must learn to sellor risk being squeezed out of business by competitors.

Feel the Love

To many people, sales is a dirty word. Weve all encountered salespeople or approaches we didnt like. The following is also true: People love to be sold. When we make a purchase, if the salesperson isnt enthused or doesnt help us leave with everything we want or need, we feel unfulfilled.

Dont let your customers go away dissatisfied. Learn to sell. Selling is no different than any other skill; you just need to know some basics. Following is a sales outline geared toward the boat- and RV-storage sector. It includes just five steps:

1. Introduce yourself.
2. Ask discovery questions.
3. Build agreement on issues.
4. Create urgency.
5. Close the deal.

Introduce Yourself

You have to introduce yourself to customers and potential clients. They need to perceive you as friendly and inviting. If you share a smile, whether in person or on the phone, you get to do business. Let them see you as knowledgeable and helpful. Answer their questions with authority and caring. If they say, I think I bent my prop shaft because Im feeling a weird vibration, answer, Sure, I can help you with that. Actually, thats a good answer for just about any question, dont you think?

Ask Discovery Questions

Questions are a great way to learn and listen. The answers tell you about customers needs and wants and something of their personalities, which is important. Most people ask you a question to start a conversation, not because they know what they need. If someone asks how much your RV parking spaces cost, hes really saying, I need help storing and maintaining my RV. So let him understand how you can assist.

Good questions help you raise important issues customers may not have considered. There are a lot of details involved in caring for boats and RVs. To be of maximum assistance, you need to be informative. You keep up with best practices, dont you? Share these with your customers so they can benefit.

Finally, questions help qualify customers based on when they need help, how much they have budgeted, how they think they will be best served, what they already know about boats and RVs, and how they feel about your offerings. Develop some great discovery questions and use them often. Share them with your staff members and have them make the pitch. Youll see increases in revenues, referrals and return business.

Build Agreement on Issues

In a way, you cant actually sell anyone anything. They have to talk themselves into doing business with you. And they will do that if you break down the transaction into issues on which you can agree. Many relate to the who, what, where, when and how questions discussed earlier. The most important items to establish are: How soon will they need to store? What size space will be best? How much are they looking to spend?

Create Urgency

Its always better for the customer to make a decision while he is talking to you. If he doesnt make a decision then, he may get distracted, take on another project, spend his money on something else or become interested in one of your competitors.

Create urgency by letting him know space is limited and availability is fleeting. Tell him that once you have a space open, it goes fast, so its best to reserve now. If his vehicle requires service, it should be scheduled at this moment, because your staff gets busy and convenient appointments are not guaranteed. The last thing you want is someone becoming disappointed because a space rented before he would commit or services were booked.

Close the Deal

To close means to get a yes and a time frame for fulfillment. Closing is not saying, Thanks for calling. We hope to see you soon. You ask a confirming question, and write the action on the calendar. You ask, Will Monday be good, or will Tuesday be better? The customer says, Tuesday is good. You both write it in for Tuesday.

Art of the Close

Nailing the close is the most important and, for some people, difficult part of making a sale. Dont be intimidatedsealing a deal isnt that hard. Here are some examples of classic closes with a few scripted phrases. Try them out and see which work best for you:

The Alternate-Choice Close. This close asks the customer a question and provides two options. A yes to either choice means he will buy from you.

Is Monday good for you, or is Tuesday more convenient?

Would you like the covered space or the enclosed space?

Will you need 24-hour access, or will 7 a.m. to 9 p.m. be sufficient?

Close on the Minor Issues. In this close, you get the customer to make small decisions. Saying yes to a small decision means he will make the big purchase.

When did you want to take delivery of the new boat?

How often will you be taking your RV out of storage?

Did you want us to clean your RV while we have it here?

The Puppy-Dog Close. I love this one because I used to sell puppies. This is where you let the customer take the puppy home for a week before paying. He only brings it back if he doesnt want to keep it. How many puppies come back? None.

Your first month of storage is free with no obligation to continue.

The first use of the dump station is free to people who rent a parking space.

Boat-prep service is free for the first-time user.

The Order-Blank Close. If you start filling out the order and the prospect doesnt stop you, you have a sale. Take out whatever form you use to write up sales or service, and start writing. Get a name, address, phone number, make and model of the vehicle, date you are scheduling service, etc. When you have everything filled out, pass the form to the customer and show him where to sign. Presto! The deal is sealed.

The Straight Question. This is a great way to move a customer to a decision after you have talked enough about the subject and agreed on some minor issues. Youre pretty sure what you have to offer is the persons best option, and the prospect doesnt seem to have any objections. You need to move along and close the deal, so you ask something like:

Does that sound good to you

Is that what youd like?

Can we get started today?

Are you ready to go ahead?

The Tag Close. This technique allows you to tell the customer you are ready to do business, and then ask for the sale by tagging on an affirmative.

Lets go ahead and get started, OK?

Just pull it in here and well get started, OK?

So then, well get you in on Tuesday, right? OK?

Listen Closely

Sharp listening skills will help you succeed in every step of becoming a sales wizard. Paying attention may be a challenge when youre busy, or when its your 15th time answering the same question about fuel filters or seasonal hours in a day. Bite your lip, hold your tongue. Allow people to finish their sentences. They will see you as a rude know-it-all if you dont listen before you answer.

Heres a valuable tip to hone your listening skills: Paraphrase what your customer says. Repeat it for clarification. If he says it once, it might have been just a thought. If you repeat it and he confirms it, then its fact. This leads to a solid sale. Say something like, If I understand you correctly, then ... or So, if I hear you right ....

Once youve gotten comfortable with the basics of a smiling introduction, some great discovery questions, and the ability to create urgency and close the sale, there are lots of ways to fine tune these skills and add more. Its a little like learning to hit in baseball camp. When you can hit the fastball and the curveball, you can start working on the slider and the change-up. Good luck, and good selling.

Tron Jordheim is the director of PhoneSmart, an off-site sales force that helps storage owners rent to more people through its call center, secret-shopping service, sales-training programs and Want2Store.com facility locator. You can read what he is up to at www.selfstorageblog.com. For more information, e-mail [email protected].

A decade ago, there seemed to be an aversion for records storage within a self-storage environment, mostly because of simple ignorance of the product. My daddy once told me, Son, theres a difference between ignorance and stupidity. All of us are ignorant of something, and theres nothing wrong with that. The stupid people are those who dont understand theyre ignorant.

Thankfully, times have changed. Records storage often finds a home in self-storage, even though one requires lots of active participation with customers and the other is a fairly passive business. How do you reconcile these diverse models? By taking advantage of the technology, techniques and management styles currently available. But first, lets look at the different types of records storage.

Traditional Records Storage

In the past, traditional records storage was a stand-alone business with demanding requirements for capital, personnel and outside sales. The owner of a traditional records center came from industries like moving and storage, warehousing or transportation. Because the operation was usually undercapitalized, the owner had to wear many hats, including that of salesperson. This meant the business grew very slowly.

Today, traditional records storage involves a new entity: private equity. There are now about 10 private-equity groups buying commercial records centers with the single goal of purchasing market share. These companies look at the industry as a way to achieve permanent return on their investments. Their profit model relies on the annuity revenue of storage volume plus annual creep (record growth minus record destruction).

The good news is this model gives the industry an attractive investment strategy. Revenue always increases because of the permanency of storage along with the built-in growth factor and annual rate hikes. The bad news is the cost of buying mature records centers is high, and there are only so many good ones to acquire. There are about 100 peak performers worldwide, and theyre not for sale because theyre cash cows. They have millions of boxes in storage in the worlds largest marketsHong Kong, London, Los Angeles, New York, San Francisco, Singapore, Sydney, etc.

Nontraditional Records Storage

Now lets get to the heart of the matter: Nontraditional records storage has become more prominent in the last decade. Its very different from traditional storage in its form, content, services, operations, management, marketing and sales. Best of all, it has distinct advantages.

Nontraditional records storage generally emerges within the walls of an existing business with an established client base. Its most lucrative when coupled with self-storage. Why? Self-storage has certain attributes other businesses lack, such as rentable storage space, a local base of business clients, personnel, a storefront and a need for ancillary services.

Rentable storage space. Self-storage always has space to rent. The only difference between self-storage and records storage is square vs. cubic footage. With records storage, you get to charge for height as well as width and depth.

Local client base. Self-storage customers usually come from the surrounding neighborhood, which almost always contains small businesses. This is a great advantage to records-storage operations, which thrive on this target market.

Personnel. No additional employees are necessary to operate nontraditional records storage. Outsourcing and current staff can handle the load.

Storefront. As a self-storage operator, you have something your traditional competitors dont have: walk-in traffic. Hundreds or thousands of prospects may walk through your door every year, and some of them will represent small businesses that need records storage.

Need for ancillary services. In todays business environment, storage facilities must diversify their services to compete. Options include post and shipping, truck rentals, wine storage, boat and RV storage, etc. Records storage adds extraordinary value for business clients, as youll read later.

Working Without Exception

The most illogical myth about records storage is it only works in small markets where self-storage is overbuilt. Nothing could be further from the truth. Here are four real-life examples to demonstrate the success of records storage in diverse markets.

Our first example is an eight-facility self-storage operator in a top-five U.S. market with a population of more than 5 million. Each facility is owned separately but managed by the same company. Their business plan has included the sale of records storage to walk-in traffic for nearly 10 years. It also contains two key ingredients: a training program and a compensation program for office personnel. Over the past decade, the facilities have amassed thousands of records-storage boxes. Last year, the operator built a full-service, traditional facility and employed its first full-time salesperson. It continues to operate nontraditional storage out of its storefronts.

Example No. 2 is a single self-storage facility in a fast-growing suburb of a large regional market. It is a showcase facility in look and style and has more than 1,800 units. The owners understood the need for hiring qualified office staff who could cross sell their various high-end services. They began their records-storage business more than 10 years ago and have collected several hundred thousand boxes. Two years ago, they built a new warehouse on their property and transitioned to a traditional records center with a full-time general manager and salesperson.

Our third case is a facility in a small market of less than 100,000 people. The owner decided early on that he wanted only customers who would have little or no need for services such as retrieval (known as under the minimum accounts). In about seven years, he has achieved 35,000 boxes at an average yield of 75 cents per cubic foot. He offers very little by the way of extras but generates great cash flow.

The last example is a downtown self-storage facility in a city of about 500,000 people. The multistory building has a first floor with 16-foot ceilings and convenient drive-in bays. The shelving was constructed with a catwalk and accommodates about 60,000 boxes. The facility has been full for years. Every year, rates go up, and the owner manages his growth by firing the worst-paying client and allowing a more reliable customer to fill the space. He serves only the downtown market with bicycle and foot-courier service.

The list of success stories goes on and on. Dont let anyone tell you records storage doesnt work in self-storageit simply isnt true. It works in large, medium or small facilities in huge or even the tiniest markets. The only caveat is it requires a sound strategy for marketing and implementation.

The Service Model

As part of your business plan, you must know what your offering will mean to the local market, i.e., your service strategy. There are roughly 37 services commercial records centers can offer. You define your business via those you have the desire, capital and resources to provide. Keep in mind that all services require:

• PeopleThere are four staffing models: full-time, part-time, temporary and outsourced. None are inherently good or bad. You choose the option that best fits your operation.
• ProcessYou must have policies and procedures for providing services, i.e., an operating manual. Policies define the limits of a service, and procedures outline the steps to a predetermined result.
• TechnologyOne of the best things about technology is it allows us to do more with less. Choosing the right tools can reduce personnel requirements and increase profit margins.
• ManagementRegardless of the role technology plays, you need management to achieve your objectives. Resources can be automated to a great degree, but only managers can provide supervision.

The Profit Model

In records storage, theres a big difference between price and yield. This is perhaps the most misunderstood aspect of the business. Your price list may show a specific figure, but your yield per unit of storage may be twice or three times that number. This is not magic. It requires you to carefully construct your services, contract and pricing to optimize yield.

In traditional records storage, its common for price and yield to be identical or to vary within 10 percent of each other. In nontraditional records storage, there are a dozen or more factors that raise yield while keeping overall costs low. (For more details about how this works, read Price and Yield Differences in the May 2003 issue of Inside Self-Storage, also available in the archive at www.insideselfstorage.com.)

The Value Model

Value is defined by the client, not the vendor. To understand value of any service, you must know what is important to your customers. Space is never the issue in records storage. Business customers can get that anywhere. The real issues are convenience (ease of use plus expediency) and compliance.

Compliance is indeed king of the hill. It has been driven by regulation, litigation, malicious behavior on behalf of employees, and terrorism. People want to keep their records safe and confidential, maintaining documents integrity and ensuring they will not be lost or mistreated. The provision of that service is far more important than storage itself. As Forrest Gump might say, Value is as value does.

Success Model

When it comes to nontraditional records storage, success is not the result of a single factor but several. When it comes down to it, youre the one who determines the scope of your operation. The business potential is constrained only by desire, capital and resources. Records storage can work in even the simplest model in the smallest facility.

Cary F. McGovern is the principal of FileMan Records Management, which offers full-service assistance for commercial records-storage startups and sales training in commercial records-management operations. For help with feasibility determination, operational implementation or marketing support, call 877.FILEMAN; e-mail [email protected]; visit www.fileman.com.

Not many companies can boast more than 400 percent growth in less than a decade. But Uncle Bobs Self Storage is one of the fortunate few, expanding from 66 to 283 stores since 1995. Sovran Self Storage Inc. operates the facilities, and is a success story in its own right.

Founded as a financial-planning firm in 1982, Buffalo, N.Y.-based Sovran offered a variety of investment opportunities for its clients. In 1985, the company invested in its first self-storage property. From that point forward, our only focus was on acquiring self-storage, says Diane Piegza, vice president of investor relations and corporation communications.

An Uncle Bobs facility in Phoenix.

By the mid-90s, Sovran had reached a crossroads. With 66 Uncle Bobs facilities, the company faced limited growth potential. We had three choices: continue operating as a small, private company, sell, or take the company public and continue to grow, Piegza says. The company opted for expansion and went public in 1995. Since then, it has acquired more than 200 sites throughout Arizona, the East Coast and Texas.

Our facilities are typically located in first-tier suburbs of large metropolitan markets, says David Rogers, chief financial officer. We prefer to acquire stores with a presencethat is, highly visible with ease of ingress and egress.

Uncle Bob on the Move

As part of its mission, Uncle Bobs provides clean, safe and innovative storage solutions. But the companys principal advantage is the spectrum of moving and storage options at each location, says Chris Laczi, advertising director. Naturally, we intend to provide the best possible storage for our customers needs, but we also strive to provide the tools and assistance they need for moving, he says. The company has a fleet of 14-foot rental trucks with features like ramp access, air-conditioning and automatic transmission. If a customer rents a space, he can use a truck for free.

Uncle Bobs also sells a full line of packing supplies including boxes, tape, furniture and mattress covers, packing filler, and more. Through a partnership with BoxesDirect.com, the company enables customers to buy boxes online, though the bulk of its sales are still at the store level, Laczi says.

Uncle Bobs offers free use of a 14-foot moving truck to any customer who rents a unit.

Uncle Bob Builds to Order

The average Uncle Bobs facility has about 58,000 rentable square feet of space and 565 units. What size space does the company offer? Well, that depends on the customer. Thanks to Flex-a-Space technology, tenants are not limited to conventional dimensions. When it comes to storage, weve learned that one space does not fit all, Laczi says. Using a patent-pending design, each unit features an adjustable wall to fit each customers needsand budget.

The process of unit selection has been simplified with the creation of an office demonstration unit, which can be changed to simulate all the different options. This eliminates the need for a facility tour. When a customer calls or walks in the door, our first question is not What size would you like? says Laczi. Were more interested in what items he will be storing, with the intention of matching them with the best possible space.

Uncle Bob Keeps His Cool

At Uncle Bobs, customers can choose from four storage environments: traditional; climate control, in which the temperature is maintained between 50 and 80 degrees; humidity control, which uses the companys patented Dri-Guard system; and a combination of temperature and humidity control, which uses Dri-Guard Plus.

Dri-Guard technology maintains a units relative humidity at less than 50 percent.

Dri-Guard came to Uncle Bobs through the efforts of Sovrans late Richard Sinnott and Logis-Tech, a developer of humidity-control equipment for government, military and museum applications. The Dri-Guard central-air processing engine is built into one of a buildings units or just outside the climate-controlled space. Each unit is then fitted with a ventilation system and sensors connected to the engine, which maintains relative humidity below 50 percent. At higher levels, mold and mildew can grow, metal can corrode, wood begins to warp, and dust mites can flourish.

Dri-Guard spaces are ideal for customers storing valuables such as furniture, clothing, files, and any other metal, wood, fabric and paper, Laczi says. Each unit is monitored by software that immediately knows if the humidity level has become unsafe and corrects it. If a customer leaves his unit door open, for example, Dri-Guard can return the space to appropriate levels within 30 minutes.

In the Trenches

Sovran considers its managers and customer-care representatives to be its most important assets, Piegza says, and personality and attitude are key factors in the hiring process. We can train for the operations side. Additionally, we empower our managers to make decisions based on the guidelines provided, so we look for an entrepreneurial spirit.

New hires participate in an intensive week-long program at Uncle Bobs state-of-the-art training center.

New managers receive on-the-job training prior to attending an intensive, week-long program at the companys state-of-the-art training center. After schooling, managers and assistants attend periodic roundtable meetings where they learn about company goals and discuss and implement new sales and marketing strategies. An employee-only website and bimonthly newsletter helps keep everyone current on company affairs and recognize top performers.

Uncle Bob Sees the Future

Sovran will continue to purchase properties in existing and new markets as the opportunities arise, says Rogers. We have committed up to $40 million to expanding and enhancing our current portfolio over the next three years.

Because self-storage customers are consistently more sophisticated in their desires, the company also plans to enhance the construction quality, appearance and accessibility of its facilities, offering more amenities and attractions for residential and commercial clients. Distribution networks and off-line retail storage will be a strong component of any operators rent roll, Rogers says.

In addition, technology will play a bigger role at Uncle Bobs. State-of-the-art security and climate-control systems are already the norm, but online rentals and payments as well as a call-center service are also on the horizon. Rogers looks forward to kiosk-attended stores and refined pricing matrixes and marketing techniques.

We are proud of our growth and accomplishments and are looking forward to our next 20 years in the industry, concludes Piegza. For more information, call 800.242.1715; visit www.unclebobs.com.

The self-storage industry has undergone many changes over the past 20 years, evolving from a core group of small, mom-and-pop operations to a large, powerful organization of professional business people. The rapid growth of the industry has further created a variety of challenging new issues, many of which we are just coming to terms with.

When the self-storage industry was young, so were the buildings. Most had secure new roofs that did not leak, factory-fresh doors that properly sealed the units, and a lower amount of crime at facilities compared to today. This environment was very attractive to insurance companies, several of which developed products specifically for the self-storage industry. These specialty insurers provided much better coverage than what was generally available at the time, and many offered significantly reduced premiums for substantial savings.

During the late '80s, while the self-storage industry was maturing, so were its buildings. Due to various issues experienced at the time--primarily the recession--maintenance was deferred in many facilities. Additionally, the criminal element found self-storage an ideal place to conduct their activities. These developments caused losses in the industry and helped insurance costs rise.

One of the areas with a dramatic increase in claims activity has been customers' goods. Customers' goods legal liability is an important coverage specific to the self-storage industry. The basic premise of self-storage is that owners act as landlords, not warehouseman: Landlords never take possession of customers' goods. Therefore, owners are not responsible for those goods since they are simply renting space. However, there are certain situations that can create legal liability for the owner if damage occurs to your customers' goods. For example, by providing a building to store items, owners represent protection against the elements. If a customer's goods are damaged by water or some other form of the elements, he may feel that the facility operator is somehow negligent in honoring that representation.

If you, the owner, are found legally liable for damage to customers' stored items, your customers' goods legal liability insurance coverage will pay the claim. Just as importantly, it provides defense costs even if a claim is found to be groundless, false or fraudulent. It also includes coverage for damage done to customers' goods stored in the open, should you be found legally liable for that damage.

Customers' goods legal liability coverage is not normally available in the standard insurance market and cannot normally be added to the standard business-owner's package policy. It is coverage that is available through specialty markets for self-storage insurance.

With the recession well behind us, most facility owners have their deferred maintenance schedules under control. This new emphasis on routine maintenance is helping to contain losses in the area of our customers' goods. Aside from completely re-roofing a facility, there are many new products available for sealing aging roofs. There are also companies that sell maintenance products, such as unit-door threshold seals, that provide cost-effective alternatives to more expensive repairs. And facility operators have kept busy implementing new ideas of their own to help contain losses, such as providing pallets in each storage locker. The pallets keep their customers' belongings a few inches off the floor, helping to keep them dry in the event of surface water accumulation.

Security is also a major concern, and a tremendous number of vendors are in the business of providing various types of security equipment. A growing number of facilities today are equipped with door alarms, computer-controlled entry gates and high-tech surveillance equipment. These products, accompanied by a good resident manager, can help control crime.

Although sad to say, the days are long gone when we can rent a unit to new customers and turn our back on their activities in our facilities. Many operators today routinely photograph customers, and others even obtain their fingerprints. This may seem a little drastic, but it has become a necessary practice in some areas. Some operators argue that this type of intrusion will chase off customers; however, if it is done in a manner that expresses concern for their property, very few honest people will mind the extra care taken for their security. The customer that it does chase off might be a criminal, and lost revenue on a criminal is essentially money in the bank.

Another good crime-prevention procedure falls under the heading of follow-up marketing. For example, mailing a new customer a thank-you card the day he rents the unit is not only good marketing, but can help you discover a problem sooner than if no contact was made until the customer became delinquent. You can also include referral cards with the thank-you note for customer's friends and neighbors. When a prospective tenant presents the referral card, the referring customer gets a gift or a discount. This creates good customer relations and helps reduce the likelihood of crime in your facility.

New construction and proper maintenance of buildings, combined with hands-on management, attention to security and the prevention of crime, are creating safer and more secure places for customers to store their goods. Combine these efforts with good customer relations and it will help keep insurance costs for the self-storage industry at a very affordable level.

David Wilhite is the marketing manager of Universal Insurance Facilities Inc. Universal offers a complete package of coverages specifically designed to meet the needs of the self-storage industry, including loss of income, employee dishonesty, comprehensive business liability, hazardous-contents removal and customer storage. For more information, contact Universal at Box 40079, Phoenix, AZ 85067-0079; phone (800) 844-2101; fax (602) 970-6240; Web: www.vpico.com/universal.

One of this year's hot legal topics concerns any storage operator who advertises the security advantages of his facility. Ironically, by using certain words to convince customers of the safety features you provide, you leave yourself vulnerable to lawsuitsregardless of contract language that releases you from liability.

How can tenants find you liable for theft and other damages? The theory goes something like this: Your lease provides all the normal language that would protect you from being liable to the tenant for losses, damage to property, theft, disappearance, etc. But wait! Then you say or do something beyond the parameters of the lease, giving the tenant cause to assume more protection or coverage was providedand a valid legal argument.

The most common way an owner inadvertently falls prey to this kind of liability is by using words such as safety and security in his facility name. As an operator, you go to great lengths to disclaim liability for guarding and protecting tenants property. But if you use security-related words in your name, customers can argue it led them to believe your facility was safer or more secure than others, influencing their decision to store with you.

Beware Two Words

Storage operators are always looking for ways to differentiate themselves from competition, and that can be especially difficult when it comes to outdoor or semi-enclosed vehicle storage. Lets face it: It's just parcel of gravel or paved lot. Many operators are turning to the security aspects of their property to create a marketing edge. Im not suggesting you ignore your security features, but when describing your setup, beware of these two words (and others like them): surveillance and monitored.

I often see these words in facility advertisements, brochures, websites, property signage and lease documents. The term surveillance normally appears in the context of video cameras, and monitored or monitoring when discussing video, alarms or access.

A major dictionary defines surveillance as close watch kept over someone or something (as by a detective). To monitor is defined as to watch, keep track of, or check, usually for a special purpose. Do you see the problem? When you use these words, you suggest someone is closely watching or keeping track of tenants belongings.

If you have cameras that are live but do not record (drones), and you dont stare at a monitor all day and night, you dont truly have video surveillance. If you videotape or digitally record 10 cameras but dont review the recordings regularly, again, you dont truly have video surveillance. If you claim to have surveillance at the gate and dont watch to ensure everyone who goes in and out has legitimate access, guess what you dont have?

Likewise, if you promise video monitoring, you imply someone is watching the video cameras playback at all times. If you claim to have monitored alarms, you give the impression someone is closely watching the alarm system round-the-clock, ready to dispatch the manager or police when an alarm sounds.

Manager Expectations, Responsibilities

Be cautious when describing a managers security duties. When you say a manager lives on site and therefore monitors the facility, you imply he is there 24/7. That claim has a few flaws. First, unless your manager is superhuman, I doubt he can watch the entire facility at once. Second, I doubt he is awake and watching only the facility day and night. Finally, your manager probably isnt on site all the time. He may shop, visit family and friends, or take vacations.

Considering the definitions of surveillance and monitoring, lets look at a hypothetical situation: An intruder vandalizes an expensive boat stored at your facility or steals a stereo inside an RV. If you claim you have video monitoring or surveillance, tenants might make several presumptions. They may think someone quickly noticed the thief lurking about the premises, witnessed the actual break-in, and contacted authorities while the crime was still occurring. After all, somebody is watching your video-camera output at all times, right?

Heres another scenario: Lets say your gate or vehicle-storage units are alarmed, and you have stated that you provide alarm monitoring. But all that really happens is an alarm goes off, and if the manager is present and hears it, he calls the police, or maybe checks the alarm later. Further, if you claim an on-site manager monitors the premises, a tenant might presume a manager is walking the property or looking through security cameras at all times. At the very least, he may think a manager is constantly vigilant for theft.

The term manager monitoring gives rise to a whole new level of employee responsibility. It may include detecting and notifying tenants of problems with their stored vehicles almost immediately after trouble is evident rather than when a manager happens to notice it. This is a very different standard. Your manager might not closely inspect every vehicle daily. But if you claim to have monitoring, a tenant could contend the manager has a duty to closely inspect every vehicle at least once a day for damage, theft, leakage, etc.

These hypothetical scenarios do not even begin to consider how a manager will know whether a vehicle has been stolen or removed by the tenant, and if he has a duty to investigate further. That is a separate issue altogether.

Based on the language you use in your collaterals and advertising, tenants can argue you changed your contractual relationship and assumed a greater responsibility to watch and care for their stored vehicles. Theres nothing wrong with putting your best foot forward and aggressively marketing your facility. But watch your words so you dont take on a higher duty of care than you intend.

Jeffrey Greenberger practces with the law firm of Katz, Greenberger & Norton LLP in Cincinnati, which primarily represents owners and operators of commercial real estate, including self-storage. This column is for the purpose of providing general legal insight into the self-storage field and should not be substituted for the advice of your own attorney. Mr. Greenberger is licensed to practice in the states of Ohio and Kentucky, and is the legal counsel for the Ohio Self Storage Owners Society and the Kentucky Self Storage Association. He is a regular contributor to Inside Self-Storage magazine and the tradeshows it sponsors. For more information, call 513.721.5151; e-mail [email protected].

As RV and boat storage develops an identity independent of traditional self-storage, its important for developers to educate themselves on the design and construction issues specific to this exciting product. Sit down at a design kick-off meeting, and several hot topics are sure to surface: access and drive-aisle width, site slope, dump stations, wash bays and shielding.

Aisle Width and Access

First, consider the size of recreational vehicles. They can be 55 feet long, 8 feet wide (not including the 16-inch mirrors on each side), and more than 10 feet tall (not including satellite dishes, ladders and air-conditioners). You have acquired a parcel of land on which you want to cram as many of these behemoth machines as possible. How do you accomplish this?

There are some rules of thumb to guarantee drivers easy access to spaces while allowing maximum land usage. The first question that must be asked is whether the facility owner prefers 90-degree access to the units or angled access is acceptable, says Tony Cooper, vice president of T2 Architectural Group. Most owners recognize the benefit of angled access and will choose that option. With 90-degree access, you need a 55-foot-wide drive aisle to properly enter and exit the spaces. If spaces are angled at 30 to 45 degrees, the drive-aisle width can be reduced to 35 feet and still allow ease of access, even for the largest RVs.

The second major consideration is the turn radius built into the site. Most fire departments require a minimum turning radius for their trucks that meets or exceeds the turning requirements of an RV. If youre in an area with no restrictions, a 35-degree inside, 45-degree middle and 55-degree outside turning radius should be sufficient.

Standard industry clear height for boat/RV units is 14 feet. This will accommodate even the most tricked out vehicles. For enclosed units, a 10- to 12-foot door width is safe, but doors are often designed at 14 feet wide.

Site Slope

Slopes and hills on a site can present challenges. If your boat/RV storage is not enclosedmeaning you offer uncovered or canopy-covered parking onlyslopes can be easy to handle because parking areas can match the slope, and no stepping is required. But if your site includes enclosed units, its critical to use the most level site available.

For example, consider Eagle Storage & Development LLC, a fully enclosed RV facility under construction in Lake Havasu City, Ariz. The property slopes more than 40 feet from one end to the other. With only 13 inches of ground clearance on the largest RVs, the civil engineer who designed the elevations had to consider the risk of vehicles bottoming out.

The problem was addressed by stepping each unit a maximum of 9 inches. This circumvented the issue of needing the drive aisle to accommodate large steps in the slabs. Using so many steps was costly but necessary in this case. Another option to minimize the negative effects of grade is sloping the slab, which is helpful only on sites with very gradual inclines. That maximum slab slope should be 0.5 percent; anything greater could cause roll-up doors to bind.

Dump Stations and Wash Bays

Site owners like to include dump stations and wash bays with their boat/RV storage to increase marketability and add income. Unfortunately, these ancillaries are often neglected until late in construction, causing delays. The systems require underground work, which must be addressed early in the project. Owners should urge their civil engineers to account for these uses as early in the design phase as possible.

Dump stations are not allowed in some municipalities. Where they are permitted, they can be easy to buildor quite messy, depending on the city and the efforts of the civil engineer. In most cases, a station comprises a 5- to 6-foot-wide concrete catch, curbed at the edges and sloped to the middle, where a brass cap and flange provide access to a sewer pipe. The engineers challenge is to decide where the pipe leads. It may run directly to a sewer, a P-trap linked to a sewer, a holding tank or a septic tank.

Its equally critical to address wash bays early in the design process. Most cities require interceptors for grease and sand because they can clog sewers and cause problems for local residents; but interceptors can be difficult to find. They are typically expensive and need to be ordered in advance and placed in the right spot. A wash bay also requires a removable grate system so it can be cleaned.

Shielding

Finally, storage owners need to consider zoning stipulations. Some require RVs to be completely shielded from view, especially in the case of canopy or uncovered storage. This can be especially challenging if theres a subdivision on a hill above the project. Building high earth berms with 8- to 12-foot walls is how most developers choose to deal with the issue.

The development of RV and boat storage can be very rewarding. A knowledgeable team of architects, engineers and general contractors can navigate the details of design and construction, ensuring a successful project.

Tarik Williams is the vice president of TLW Construction Inc., a self-storage and RV-storage general-contracting specialist for the Western states. Mr. Williams is a member of the Arizona, California, and Texas self-storage associations and a regular speaker at conferences of the Arizona Mini Storage Association. He holds degrees in construction and business, is a licensed real estate broker, and has formed investment groups for real estate acquisition and self-storage development. For more information, call 877.392.1656; e-mail [email protected].